Pound Drops To Record Low Against US Dollar

 

The British pound has reached an all-time low against the US dollar early Monday.

 

This happened after Treasury chief Kwasi Kwarteng pledged a sweeping package of tax cuts.

 

This fueled concerns about the government’s economic policy as the United Kingdom teeters toward recession.

 

As a result, the pound dipped as low as $1.0349 early on Monday but then rebounded to $1.07.

 

The UK government's new tax-cut plan has sparked concerns that increased public borrowing will worsen the nation’s cost-of-living crisis.

 

This comes as the British currency plunged more than 3% on Friday, trading at levels last seen in the early 1970s.

 

Treasury chief Kwasi Kwarteng announced sweeping tax cuts last week that he said would boost economic growth and generate increased revenue without introducing corresponding spending reductions. 

 

He also said previously announced plans to cap soaring energy bills for homes and businesses would be financed through borrowing.

 

Kwarteng offered few details on the costs of the programme or its impact on the government’s own targets for reducing deficits and borrowing, but one independent analysis expected it to cost taxpayers €210 billion this fiscal year.

 

The news triggered the pound’s biggest drop against the U.S. dollar since March 18, 2020, when then-Prime Minister Boris Johnson announced the first nationwide lockdown to control the spread of COVID-19.

 

The British currency closed at $1.0822 in London on Friday, from $1.1255 on Thursday.